India’s Demat 2.0 Pilot Raises ₹1,025 Crore in Tokenized Bonds
India’s Demat 2.0 pilot has completed three tokenized corporate bond issuances totaling ₹1,025 crore, marking a test of distributed ledger technology within the country’s regulated corporate debt market without changing investors’ existing legal or economic rights.
The Securities and Exchange Board of India (SEBI) said the institutional phase involved three issuers and 23 investors. REC Limited conducted the first issuance on September 7, According to the Securities and Exchange Board of India, raising ₹500 crore from 18 institutional investors.
L&T Limited followed on September 9 with a ₹500 crore issuance involving four investors, while IIFL raised ₹25 crore from one investor through the same infrastructure.
The three transactions represented approximately $107.2 million and were designed to test digital issuance, ownership records, settlement and servicing within India’s existing securities framework.
Demat 2.0 Keeps Existing Bond Rights Intact
Under the pilot, corporate bonds are represented as native digital tokens on a distributed ledger operated by India’s depositories. The use of tokenization does not create a new asset class or alter the legal nature of the underlying securities.
Each tokenized bond continues to carry its existing International Securities Identification Number. The original terms also remain in place, including coupon payments, maturity dates, covenants, credit ratings and issuer obligations.
As a result, investors retain the same economic and legal protections associated with conventional dematerialized corporate bonds. The approach allows regulators and market participants to evaluate distributed ledger infrastructure without replacing the established framework governing corporate debt securities.
The pilot therefore focuses on the underlying market infrastructure rather than changing the rights attached to the bonds themselves.
Tokenized Bonds Link With India’s Wholesale Digital Rupee
A key component of Demat 2.0 is its connection to the Reserve Bank of India’s wholesale central bank digital currency through the Unified Market Interface.
The arrangement is designed to coordinate the movement of securities and the corresponding cash payment within a single transaction. Through atomic settlement, both sides of the transaction are completed together, reducing the risk associated with securities and funds being transferred through separate processes.
The structure could also allow issuers to receive proceeds on the bidding date. Under conventional corporate bond issuance processes, issuers generally wait two or three days before accessing the capital raised.
Another feature of the distributed ledger is a shared record accessible to authorized institutions. A common set of verified bondholder records could reduce reconciliation requirements and help limit discrepancies between records maintained by different organizations.
The system also supports digital servicing of the bonds. Coupon and maturity payments can be delivered to bondholders’ wholesale digital rupee wallets on scheduled payment dates, potentially simplifying coordination among issuers, depositories, investors and payment institutions.
SEBI’s Pilot Moves Toward Secondary Trading and Retail Investors
SEBI has organized the Demat 2.0 initiative into three stages under its Regulatory Sandbox. The initial phase focuses on institutional issuance, allowing the infrastructure to be tested through regulated primary-market transactions.
Future stages are expected to expand the pilot into secondary-market trading and retail investor participation. Those phases will also examine how tokenized bonds can be used across a broader range of trading, settlement, custody and servicing functions.
The three initial issuances give SEBI and participating market institutions an opportunity to assess how distributed ledger technology can operate alongside India’s established securities infrastructure.
Rather than creating a separate market for digital bonds, the pilot is testing whether tokenized records, coordinated settlement and wholesale digital-rupee payments can improve processes while preserving the existing legal and investor protections attached to corporate bonds.
Writer: Marcus RenfieldCrypto Market Analyst & Onchain WriterMarcus Renfield covers cryptocurrency markets with a focus on onchain data, Bitcoin price action, and emerging market narratives. His writing examines how capital flows, network activity, and broader market structure influence short- and medium-term trends.He aims to provide clear, data-informed analysis for readers seeking a deeper understanding of crypto market dynamics.